India largest lender, State Bank of India (SBI), has picked up a 19.7% stake in Orissa-based Mayfair Hotels and Resorts (MHRL). The stake is acquired through fresh issue of 37,33,333 shares with a face value of Rs 10 each, reports Business Standard. The deal size is not known. The deal comes at a time when real estate sector is facing severe cash crunch, and several builders are selling their properties at distressed sale prices.
MHRL has four properties at Bhubaneswar, Puri, Rourkela and Darjeeling and is also opening up a new 5-star deluxe property of Mayfair Gangtok in March. MHRL plans to spend Rs 260 crore on its expansion, and plans to raise Rs 65-75 crore in debt for this. The firm has also acquired a property in Goa, which it is currently expanding and refurbishing, and plans to launch it September 2009. MHRL is also expected to go for an IPO in 24 to 36 months, and plans to raise upto Rs 150 crore through it.
MHRL will have 600 rooms after its expansion. The company is expecting revenues of Rs 60 crore in 2008-09 with net profit of Rs 13 crore this year.
The hospitality industry has been impacted by a double whammy of events this year. Where as tourist spending was anyways falling due to global recession, Indian hotels were impacted as tourists cancelled their plans after last months terrorist attacks in Mumbai. Hotels across the country have seen a drop of 50% in occupancy, and many hotels have also reduced tariffs in order to attract customers.